Issues Affecting US Real Estate Now and In the Future

Real estate and the mortgage industry is a highly volatile industry. There are various issues affecting it that might change how loan originators and lenders react to the situation. These issues also affect how homebuyers decide whether they purchase a home or not. If you want to be successful in this industry you must remain vigilant and aware of the issues affecting US real estate now and in the future.

Here are some of the issues affecting US real estate now and in the future:

Affordability of Housing

Housing prices continue to increase not because of any artificial means but because due to the effect of supply and demand. New construction of houses is still very low plus the supply of affordable homes and apartments are low. There is simply not enough supply and as the law of economics says, the lower the supply the higher the price.

If we can only increase the number of available housing and the rate of new construction then surely we can see a relative drop in prices. If housing affordability remains an issue then that means a lower number of loans.

Battle of Generations

Today’s market demographics is the most chaotic than ever. For the first time in more than 50 years, there are four different groups influencing the market. Each of these generations – Millennials, Baby Boomers, Gen X and Gen Y, have a different perspective. Among these group, Millenials make up the majority and they are somewhat adamant about getting a new home.

According to CRE Chair Joseph Nahas, ““We have more people today under 40 influencing real estate. That effect has not been fully felt yet. It’s going to take some time. It’s going to happen faster because everything in this era happens faster.”

Big Economic Factor

The Fed raises Federal rates for the second time this year. With such an increase it can add up to the affordability factor of housing. Also, it is seen as a potential contributor to a possible recession in 2019-2020 affecting jobs and homeownership. As a result of this, there will be a lower number of home purchases or resales. It also creates higher mortgage rates which at some point discourages homeownership.

If inflation will not get out of control and remain relatively low then there can still be a positive impact. This means that people will still have enough purchasing power to buy new homes. It will be something to look up to in the mortgage industry.

Midterm Election

Midterm elections are coming next year and this contributes a lot to the volatility of the market from this point to next year. Will the current administration policies be intact or will it change? The potential difference in policies contributes a lot to this uncertainty making it one of the issues affecting US real estate.

GOP and Democrats will once again be face to face for the control of both Senate and Congress. If there will be a change of control then we should expect some policy changes as well.

Technology

Technology may be one of the current and future part of issues affecting US real estate today and in the future. The demand for Smart Cities is also rising. Homeowners demand connectivity and smart housing something not present in homes. Old homes which are not that connected and in-tune might be even harder to sell.

Blockchain technology is also gaining ground in real estate and mortgage. Its adaption will really affect the market in a very big and significant way. Once there is implementation on the use of this technology it can create a more transparent and faster mortgage application process,

Other Issues Affecting US Real Estate

Do you think there are other issues affecting US real estate now and in the future? If you do then please don’t hesitate to post it in the discussion/comments section below. We love to hear from you.